 Thank you for welcoming me to discuss the very arcane, but a very important subject of federal subject matter jurisdiction. This is really the perfect after-lunch speech. There could be nothing more lively than this topic to keep you awake as you digest your lunch. It has been said, however, that learning federal subject matter jurisdiction before or after lunch is like swallowing poison. So I want to remind you, however, of Voltaire's words when he said, there are no poisons, only bad stomachs. And therefore, what we're going to do today is try and make this important topic a bit more digestible, easy to follow, and apply. And I dare say, since all of you are sitting here and you've heard me make this promise before, and I hope we're living up to it, that by the end of our few hours together today, when you go back to your own courts, if you apply these rules and serve as the gateway to federal court, jurisdictionally speaking, that you can reduce your case load by at least three cases within seven working days. That's our money-back guarantee today. Now, many an attorney has said out loud and otherwise that federal judges have a lamentable, compulsive preoccupation with their own jurisdiction. And this is as it should be because the most important rule of federal jurisdiction of all rules is that federal courts are presumptively without jurisdiction. They are courts of limited jurisdiction. And so in order for a case to be in the courthouse jurisdictionally speaking, it must satisfy the requirements, not the other way around. And it was no one less than Brandeis who said that the most important thing that federal judges do is not doing. So with that is sort of our approach. Let's start off this luncheon, post-luncheon session with some basic judicial and jurisdictional calisthenics to get us into shape to figure out how we can approach some of the naughtier issues of federal jurisdiction. The maxim that federal courts are always open is incorrect, jurisdictionally speaking. They are not always open. In fact, they're presumptively closed. What I'd like you to do with me right now is imagine that this room that we're in is jurisdictionally speaking the federal courthouse. There are only four entryways to this room. If a case does not come in through one of those four entryways, then the case should not be in federal court. So as they say in the sportscast, let's go to the videotape. In this case, we have a poor man's substitute, which is the overhead projector. And I don't have one of those fancy little pointers. I have a little 10-cent blue arrow. There are four doors. Now, follow the blue arrow. Don't read ahead, that's cheating. Let's start with the front door. The front door to this courthouse, jurisdictionally speaking, as you come in, is federal question jurisdiction. We're gonna talk about each of these in detail in a moment. But let's start first finding out what those doorways are. The gut check you can perform as the case comes before you. The first door, this front door, essentially does the action arise under federal law? Does federal law create a claim for relief? If so, we've got a pretty odds-on favorite bet that it's coming in the front door. But of course, a federal defense is insufficient. Now, we'll replay a little bit of the law review and law school highlights when we get to this, but simply because there's a federal issue in the case, does not mean the case properly comes in the front door. Now we go to the visitor's door. That's our second door. Now the visitor's door's a little bit off to the side, and it's the visitor's door of diversity jurisdiction. In essence, there must be complete diversity. That rule is almost as old as the federal courts themselves. That is that all plaintiffs must be diverse from all defendants. And a little while we'll do some kindergarten exercises to eliminate some recurring problems in this area. There are special citizenship rules for determining who's a citizen of what state or states. And this visitor's door has a ticket that you got a hand at the door. Like here in Washington, every museum I've been taking my son to in the last few days, you have to have some entryway. Here, it's a $50,000 ticket. There's a jurisdictional amount that's required before they can come in the visitor's door. The visitor's door, in theory, because federal courts are to be hospitable courtrooms actions between citizens of different states when they might not get a fair shake that theory goes in a local court. Now we go to the back door. Now if you love jurisdiction, like I do, you love the back door of removal jurisdiction. This is a remarkable concept where a case can be shifted unilaterally by one party, the defendant, from one sovereignty, the state court, to the federal court. That is something we take for granted every day, but in fact, it's a remarkable jurisdictional preset. Removal jurisdiction, the back door. Well, if there's any good rule of thumb as we think about these entryways, of course, it is if the case could have been brought originally in federal court. By and large, that will be the test for whether it could be removed to federal court by the defendant. Now this door, however, is rather squeaky, procedurally speaking. The defendant has to put a lot of oil on the door because there are strict procedural requirements that throw the case back to state court, even if it was a case that could have been initiated in federal court. So this is where we keep a close eye on the procedures as we deal with the back door that's right behind me as they sneak into federal court through the removal technique. And the last one that we're gonna be looking at today is the side door of supplemental jurisdiction. Now if you're still calling it pendant and ancillary jurisdiction, you're about three or four years out of step here. It's now called by statute, Title 28, USC, Section 1367, supplemental jurisdiction. There's no such thing anymore as pendant or ancillary jurisdiction. This essentially is what we'll look at with some fascinating overhead transparencies is there's a transactional relationship required between a federal case, a federal question case, by and large, and some related state law case. It's all part of the same constitutional case to quote the Supreme Court. Therefore, that claim or party can come in. And in fact, it includes now supplemental parties. Parties who are parties to the transactionally related case, but they are not parties to the federal claim. They are supplemental parties and they can come in through the side door. I should tell you, however, that to give fair credit, Judge Schwerzer says this isn't really a side door. It's really like a pet door. That pet door that they have inside a door, the pet comes in and out, because as Judge Schwerzer emphasized to me, this door swings freely both ways. And you can get that part of the case can be dismissed or remanded, depending upon the circumstances as we look at it. So we start out thinking about federal jurisdiction. We start out asking ourselves at the outset, which door are we dealing with in terms of this federal jurisdiction question. Now, in this circumstance, as we focus on federal jurisdiction, we should emphasize a couple of things before we get going. And one of them is, is that we are flying below the radar here when we're talking about federal jurisdiction. What I mean by that is, not very many people care about it. Not, and I'll tell you, some large groups who don't really care that much about it, perhaps naturally speaking, Congress doesn't really care that much about it. For example, C-SPAN, to my great chagrin, never runs a hearing where they're talking about changes to rules. They never put on those interesting, fascinating abstention discussions that take place in seminars. They, those aren't interesting enough for them. The, so Congress doesn't really have that great an interest in it. And in fact, if they create a lot of jurisdiction, not always understanding that they're opening another door that you people have to deal with. Frankly, some, and many judges don't understand it. Particularly appellate judges. Because it's not their thing. The cases come to them. It's, you've read the appellate decisions. It's about a paragraph or two and they just deal with jurisdiction. Occasionally they'll get a case back for jurisdictional grounds, but more often than not, it's a very tiny door they get through on their way to bigger doors in their mind. So sometimes judges don't understand it. And that creates a more difficult area for you to deal with. Judge Schwerzer gave a speech recently in which he quoted H. L. Menken who said that judges are law students who grade their own exams. Well, I don't know if that's true, but in the jurisdictional area we've got to accept that sometimes the exam answer might not be right and you've got to try and wind your way around various decisions. All of us understand that the, there's a proliferation of new statutes. And there's a proliferation of court interpretations that widen the doors to get into the federal courthouse. IRISA, you've heard of IRISA, we're gonna talk about that today and don't fall asleep on me yet. We don't get that till the second half, but we're gonna talk about labor law preemption. Those are some areas of course, civil RICO, civil rights, and Congress, which I understand is considering the Violence to Women Act, that will open the door even broader. For better or worse, Congress is expanding by and large, not contracting federal jurisdiction. So who's it left to? Essentially it is left to the district court judge to slow the traffic, to act as the sentinel at the doorway to federal court, jurisdictionally speaking. Now some of you have heard me make this terrible admission before, but I'll do it again because these issues can be very difficult. But I am a professed civil procedure nerd and I know there are a few of you out there like a Frosted Flakes ad who are as well. My idea of pleasure reading is to sit on a beach, whip out the West Federal Digest and start reading head notes. So you've gotta take me with a grain of salt, but you too should have at least a similar understanding if not love of federal jurisdiction. I was reading, as is my want, the summaries of the cases in the last six months, thinking what would be some good case to talk about here. Here's one that struck me, the most common squib I noticed was the trial court cannot depart from the guidelines because. And whatever the reason in that particular appellate decision is, that's everywhere. And then there was one, a federal jurisdiction case which said no dismissal of claim that school districts served too hot a lunch to students. That according to one appellate court was enough for a constitutional claim. In one that had nothing at all to do with jurisdiction, I hope you forgive my digression to it, my favorite case of the year out of my circuit, the Ninth Circuit, was a robot may have appropriated Vanna White's right of publicity. I don't think there's gonna be a better case to read than a robot appropriating publicity of Vanna White. So that had nothing to do with jurisdiction, but let's get down to the specifics of federal subject matter jurisdiction. What I wanna do today is answer all the questions that Judge Ginsburg will not be asked at her confirmation hearings. There won't be one. Someone said they could sneak a question in, which is my great fantasy. And someone says, Judge Ginsburg, what do you think of the appellment abstention doctrine which might not necessarily be on her preparation cards? She probably knows the answer to it, but we're gonna talk about those questions that don't get raised in those public forum, but I think are equally important. That gets us started then on the first key, the front door to federal question jurisdiction. Simply put, and it can be this simple, an action is properly brought or removed to federal court if it arises under federal law. That's the critical phrase. You're familiar with it. It may be bringing back bad memories of last week's motion calendar or perhaps law school, but arising under. If you follow the bouncing ball, this is paragraph two colon 92, which is in chapter two B. Well, the first and most obvious example of this is an express or implied right of action created by federal law. Federal law creates the cause of action to claim for relief. It can do that expressly, of course, as many new statutes do, as ERISA does, as all these statutes, many of these statutes do. It can also, of course, be created impliedly if it satisfies the court B.S.H. requirements. We don't need to go over now, but there are circumstances in which statutes which don't create a private right of action are held to have impliedly created that private right of action. I would say it's fair to say that the Supreme Court is not necessarily going in the direction of expansion of private rights of action, but nevertheless, there are possibilities where it exists. You know them. I mean, they're a virtual alphabetical soup, of course. There's RICO and FELA and FTCA, ERISA, civil rights claims, federal antitrust claims. These are ones that you're very familiar with. In fact, they're so familiar, they're on that civil cover sheet that has to be filed with all actions, but they check the boxes. One sort of other interesting note, pretty much derived directly from the Constitution, of course, there can be a Bivens action, which is not created by statute, but is implied directly under the Constitution. We all know that. And one that might not strike you as much is what's called federal enclave jurisdiction. Now, I don't make this stuff up, I just report it. Federal enclave jurisdiction, according to the courts, and there's been some recent decisions on it, is where you have misconduct taking place on federal property. Now, all of you know this viscerally. Drunk driver on federal property, somehow or other it goes to federal court. Now, this theory of federal enclave criminal jurisdiction, same thing applies in civil cases. So for example, if you have a asbestos removal case, even though it might involve a government contractor, and even assuming that government contractor might be rising the status of a federal officer, you might have federal enclave jurisdiction. Because of where the tort took place, allegedly. Now, I wanna walk you down the next concept, which is very important on jurisdiction, which is something known as the insubstantial federal claim doctrine. I say it's important, it's mostly important to forget, because it shouldn't happen very often. I'll suggest to you it should rarely happen in your case practice. But here's the doctrine. The doctrine is that the federal claim that's asserted is patently without merit to use the language of the case law. It requires no significant consideration. Prisoner brings a suit and says that there's marble on the walkway to the shower, and their feet get cold on the way to the shower, and that's a federal claim. That would probably, we could probably take a vote, that claim would probably satisfy the insubstantial federal claim doctrine. There's no possibility of a federal claim there. It's so insubstantial, according to the courts, that you actually lack jurisdiction. As one person told me afterwards, the key turns, but the door doesn't open. Now, I mean, I had a case recently where someone brought a claim in federal court, alleging it, it wasn't a diversity case, but it was just a libel suit. I represent a lot of companies that get sued for libel in magazines and newspapers, and they sued my client, no diversity, and said that there was a private right of action under the First Amendment not to be libeled. Well, that doesn't pass the smell test. The best part of the case was that the amount of money this procé sought was more money than was in circulation. It had 39 zeros, and that's what they were asking for as part of their claim. One of my partners said, well, just settle it for 10% of value, and you walk away. The fact is that would probably satisfy the insubstantial federal claim doctrine. There's clear-cut case law, you don't even have to think about it. However, I said I don't think you should use this doctrine, and the reason is because if the claim is that lacking in merit, dismiss it under rule 12b6. And the reason is dismissing the claim for lack of jurisdiction is not going to be a decision on the merits, just no jurisdiction. It's a dead limb on the judicial tree waiting to be locked off at any time. Well, in this situation, you would then burden perhaps the state court with a repetitive suit. If you dismiss the claim under rule 12b6, then of course, you do have all the benefits of claim and issue, claim preclusion, restitucata, because it's a decision on the merits. And therefore, if it's that bad, you can imagine, deal with it at 12b6 to basically relieve the court system of this frivolous claim. Now, I said that on the second element of our federal question, a defense is not enough. That's as old a rule as the hills. In fact, I'll tell you how old it is. That rule comes to us from Louisville and Nashville Railroad Company versus Motley. That case was decided in 1908. That is the last time that Chicago Cubs won the World Series, which tells you how old that case is, but still good law. You remember the facts, the plaintiff sued a railroad company, a railroad claiming an agreement for a lifetime railroad pass. And in the complaint challenge, said that I know that railroad's gonna refuse to honor the pass under federal statute, and that federal statute doesn't apply. They anticipated what the defense would be to, if you will, have a federal issue under the four corners of the complaint. The Supreme Court held and has repeated it several times since, just a grain of some, but not most, that that's not a federal claim. Even though they anticipated the defense in the complaint itself, the claim does not derive from federal law. It derives from state law. Therefore, the defense, the federal defense does not create federal jurisdiction. Now, this may sound so simple that you get that kind of vacuous stare that people get at this point. I understand that. However, it has an application in a very important area, which I have to, I'll show you in a moment, has been misapplied by graduates of my course here, at least once a year. I follow up on you, I keep track of you. I feel badly if there's a jurisdiction decision that comes out that's a little skewy. So, perhaps right, a little skewy. And so, amazingly, as simple as this sounds, this doctrine in the following context gets misapplied. That is the context of defensive preemption. If state law preempts federal law, but doesn't replace with a federal claim, that's simply a defense. The most common example you know of is the Cipollone type of case where you've got someone alleging a state law claim saying failure to warn. And the argument on the defense side is, typically on removal, is yes, but you know what, this is all preempted by federal law. Or you've got some product case where there's a warning, FDA warning situation, which is becoming very common in products cases, where they say, that's an interesting state law claim you have there, but it doesn't exist. It's blotted out by federal preemption. That's a perfectly legitimate argument, but it doesn't create federal jurisdiction to the mistake of a few published decisions in the last year. There's no federal jurisdiction there because there's no federal claim there. And therefore, defensive preemption is no different than motley. And when you get to preemption in a moment, which requires a little more sitting down in your cushion is to follow, I want you to keep that concept in mind. Bar's a state law claim, but doesn't replace it with a federal claim. Therefore, that's defensive preemption only. That's not, and you may say, what about Arisa, what about labor law? I get all these cases. That's because there's a federal claim there, or at least the potential of a federal claim. So these are not uncommon. A case that decided it correctly, out of my district, Mangini versus RJ Reynolds, which is in your group of materials, at 793 F SUP 925, where the Joe Camel suit, where there's a lawsuit brought saying that whatever the company that manufactured, I guess RJ Reynolds, Joe Camel is their ad, is that ad is misleading, it's a violation of consumer rules, it misleads kids into thinking they're gonna smoke cigarettes and all those things. There was, I think, an accepted argument on federal preemption for the warning statute. However, no federal jurisdiction, proper decision. This case is not properly in this court. Now, it goes one step further than just no defense. Now, this one is also one that is a little strange on first application, but I think it'll make sense. The mere fact that the lawsuit makes reference to federal law, even if it's a substantial reference, and even if it's the only disputed claim or issue in a disputed issue in the case, does not get them in through the door. In other words, there still has to be a federal claim. Just because there's a federal issue in the case does not mean it's federal jurisdiction. Paragraph two colon 105. This is the Meryl Dow case. They couldn't have made a better hypothetical if you loved this subject. Meryl Dow versus Thompson, 1986. The parents sued a drug manufacturer in state court for their children's birth defects allegedly caused by ingesting of a drug. The state law claim included a misbranding of the drug claim, a state tort claim, and under the law, under federal law, the standard for misbranding is provided exclusively by federal law. In other words, whether it's a negligence or a strict liability claim is provided by the Food, Federal, Drug, and Cosmetics Act, which creates a presumption of negligence, even as the state law claims. So the principal issue in the case was gonna be the meaning and application of the federal law, even though there was an assertion of federal jurisdiction in that case through removal. The Supreme Court of the United States said no federal claim, no federal jurisdiction, even though the federal issue was substantial. Federal law merely provided a standard of care. It did not provide the claim for relief. It was a state law claim for relief. So it really is remarkable how many cases that get decided on this topic every year. Let's, the Seventh Circuit has a case, which I think is in your outline if it's not, I'll provide it to you, in which federal law in a property, real estate transaction controls what kind of disclosures need to take place in connection with an escrow. Allegation breaches the disclosure law. No private right of action on the federal statute, no federal claim, perfectly correct decision. Now I'll give you one. I promise I won't immortalize you, because it's the only videotape I'm doing, I'm sure, for the time being, and I do this with permission. I'll give you one case that was decided. Let's do it hypothetically, and let's agree in a Greek chorus as to what the answer is. Here's the hypothetical, wrongly decided by a graduate of this course, but never again to be wrongly decided. Security suit in federal court, perfectly valid security suit, federal security, subject matter jurisdiction. Court grants summary judgment. Very strong language says this was not a good suit, bordering on frivolous, that kind of language that you get into when you're a step away from the precipice of Rule 11, but you don't quite fall into the abyss, or the lawyers don't fall into the abyss unless they push themselves there. Now, former defendant files a lawsuit in state court, suing the former plaintiff, for you've got it, malicious prosecution. Defendant, former plaintiff, says, wait a minute, there's a federal court, and I know I didn't win there, but I felt like they understood the case. Removal to federal court, on the grounds that this is basically a federal claim. It's a federal issue, it's a federal everything. Motion to dismiss, 12 B whatever, for lack of subject matter jurisdiction in the form of a motion to remand, motion granted, yes, Greek chorus, beautiful. I should have had this Greek chorus for one of my graduates a few years ago, motion to remand denied, because it's pardoned parcel of the federal suit, and it's really a predominantly federal claim, wrong answer, it's not a federal suit, it's not a federal claim. You know what you ask yourself? What is the claim for relief? You know what it was? Malicious prosecution. Congress has not yet created a federal malicious prosecution lawsuit. So there would be no private right of action or any federal statute. However, you may say, well, good, there's no federal claim, it's not gonna get here, the front door will bar it, we'll put nails in the door, very good, however, Congress has the reverse side of a hammer and they pull the nails out. Congress has seen fit to federalize many areas that were previously state law areas. I'll give you two of the predominant examples. I'd say predominant because they usually get a certain reaction from judges who have been in the trenches a while as you have. First area, where they have federalized what is otherwise a state law claim, and they're permitted to do so, is any case involving the RTC or the FDIC as a party. Now you may say to yourself, that violates what Wagstaff just said. If I stopped right there, you would have said to me, you would have started saying, wait, why do I have to do this? Well, the fact of the matter is is that Congress has federalized in, I mean, depending upon your point of view, has federalized in statutes that either will live in infamy or otherwise. I think they were a December 7th passage in which in Title 12, USC, Section 1441A, and same title, Section 1819B, if you ever have any trouble sleeping, just pull out either of these sections and read them from cover to cover because they will put you in snooze land within a minute or two. I mean, it's better than Rush Limbaugh. So you can do it. Now here's what happens. The statute says that all suits to which the corporation, that is RTC or FDIC in the particular statute, is or becomes a party, shall be deemed, that's the critical language, shall be deemed to arise under federal law. The whole suit becomes a federal suit at the time they become a party. So even though it's a state law claim, you know, I'm talking about the financial institution which is on the verge of failure but hasn't done it yet, gets sued in a little contract claim and sure enough, the federal government comes in and they're appointed receiver, they substitution as party, boom! Removal of the federal court, they're allowed to remove and if it's, they're allowed to remove it whatever stage it's at. Believe it or not, the fifth circuit is hell and I think it's probably a ruling that'll stand up until the statute's amended if at all. That removal period does not run, does not have an inherent expiration upon judgment. The removal by the federal corporation here, the RTC or the FDIC, can take place even after the case is on appeal. Even after the appeals decided in Remireland in a list of cases and there have been a couple of fifth circuit cases since that have followed it. In Remireland is an on bonk decision in which the court is saying even if the case is on appeal and one of the cases that followed, it was terrific. You talk about getting a second bite in I think it was the Texas courts, there was a discretionary right of review. The appellate court had already decided against the institution or in favor of them. The case was over. There was all that was left was a discretionary right of review to the highest court of the state as you all know from experience not granted very often. Nevertheless, the case is removed at that point. Where's it removed to? Well, that's a great question. You have to figure out answers to these things that aren't in the statute to remove to the district court. It would appear that the proper procedure is simply to certify the case at that point in time and send it straight up to the circuit after you've certified it. You've certified me and you've accepted it. It's been removals accepted. Now just have them complete the record and do an appeal. When the time for noticing the appeal if there is such a time limit is unclear but the point is it goes to the circuit. You don't have to decide it. You don't become the state appellate court. Mercifully, we'll leave that to your hey, these corpus petitions. You are simply the conduit to get it to the appellate court in that circumstance. And then they take the case that they find it with an automatic right of appeal at that point in time. So what about things like jointer of new parties that aren't to the federal claim? The whole case gets a federal character to it. All of our other rules don't really apply and the United States Supreme Court and Fislic versus Tickton says they're free to do that because there's a federal character therefore constitutionally they can create a cause of action. Not unconstitutional to do this. How about remand? Once the case, once they settle, does the case automatically have to be remanded? I don't think so. The case is federal. We'll get to in a moment. I don't think the case has to be remanded once the RTC or FDIC settles out. You can remand I believe. I don't think it has to. I'll be the lawyer if I wanna keep it there. I say this isn't supplemental jurisdiction. This isn't improper removal. It was a proper removal. The whole case is federal, not just because of the RTC and maybe you have a federal case from there on out. There was a statute which said venue in certain cases would go directly to the District of Columbia which they then created a hopscotch rule which said we don't want it. We're sending it, we now transfer it back to where it originated. Congress stepped in and said we don't have to do that. It can out, the venue doesn't have to go to the DC's district anymore. All right, second area of sort of new thought. Supreme Court entered this area just a year and a half ago, federally chartered corporations, other federally chartered corporations can create, federal jurisdiction can be created in the charter. Federal jurisdiction may exist over a federally chartered corporation under its sue and be sued clause. Now, if you are like me, and some of you know me this well, that when the Supreme Court takes a case as it did in American National Red Cross versus SG that's gonna raise an issue as arcane as whether a federally chartered corporation can have a case in federal court. No one else cares about this case, but when the case decision comes down, you take that case with you, you read it carefully, you save it for a nice moment of the day with a glass of wine, you sit in your little study and you read that case slowly and deliberately because they don't have very many cases on jurisdiction. Well, this was one of those cases that I think has more significance than you might have thought the first glass of wine in your study. In American National Red Cross versus SG, it involved a very common situation of someone who was suing the Red Cross for alleged negligence involving HIV, tainted blood, very commonly arising suit these days. The Red Cross is a federally chartered corporation. The Supreme Court upheld federal jurisdiction overactions that involve federally chartered corporations if, and here's the big if, if the sue and be sued clause specifically refers to federal court. Now, in other words, in order to understand whether there's federal jurisdiction by removal or otherwise, original, you ask yourself, what does the sue and be sued clause say? Does it include a specific reference to federal court? If it does, then the case is properly in the court through the front door or the back door. So what do you do? Let me give you the two examples. We can, I don't know if we can do a Greek course in this one, but let's try it. In any court, here's one sue and be sued clause. In any court of law or equity, state or federal. Federal jurisdiction? Everyone? Yes, we'll have spokesperson. Yes, there's federal jurisdiction because it specifically refers to federal court, state or federal. All courts of law and equity within the United States. No, because it doesn't specifically refer to federal court. Therefore, the Supreme Court held that would not be an authorization to federal jurisdiction. Justice Scalia in dissent said this creates a wonderland of linguistic confusion. I don't know if it does that, but you've gotta read the sue and be sued clauses as the case comes in the door. What the Supreme Court giveth, the lower courts takeeth away. In Doe versus Kerwood, the Fifth Circuit, and the citations in your materials, held, that's a perfectly fine rule, we'll live with it, the Red Cross is involved, but removal's okay by this federally chartered corporation, but only if all the other defendants join in the removal. The defendants to the non-quote federal part of the case have to join, and therefore, the Fifth Circuit found a way to send it back. All right, that's the front door of federal question jurisdiction. It is a very complicated area, but if you keep it this simple, I think you'll find you'll walk your way through it. All right, now, let's go to diversity jurisdiction. And this requires a certain amount of jurisdictional algebra, and that's all it requires. You've gotta figure out where everything goes. I told you that we have a $50,000 limit here. There has to be at least that much in controversy. So, let's ask ourselves, let's first of all understand the basic rule. The basic rule is, and this is in paragraph two, colon three, three, two. The basic rule is, there must be complete diversity. Easy to state. All plaintiffs must be diverse from all defendants. Another area which surprisingly gets violated a lot. It's this simple. I said kindergarten, it's this simple. You take out a piece of paper when the case comes in the door on diversity grounds. And we're talking solely on diversity. There's another base of federal jurisdiction that doesn't matter. Removal or original, and you draw a line down the center of that piece of paper. On one side, you put plaintiff at the top. The other side, you put defendant. I clerked for Spencer Williams, and he did it like this every time. He had two things that made eminent sense to me as a law clerk. One was this kindergarten technique for diversity, and the other was for hearsay, he always drew cartoons with little bubbles. But that's, I'm not talking about evidence. Plaintiffs on one side write down the states of citizenship of all plaintiffs, including all plaintiffs who have dual citizenship, say a corporation. You gotta write down both states, or a partnership as we'll look at it in a moment, all states. Other side, defendant, write down the states of citizenship of all defendants, including dual citizenship, or multiple citizenship. Take a look at that piece of paper, and at the same state is on both sides of the line, you don't have complete diversity. Now, if you come to this realization late in the case, you do have authority under rule 21 to dismiss those defendants who, or plaintiffs for that matter, who defeat diversity and retain the case. But you should really never do that, unless you're so far in the case, and that party is pretty much not essential to your determination. Appellate courts will do it occasionally when there's a party who's really not essential to the case, and they happen to stay in the case, and we've had a whole trial. But I would suggest you not consider rule 21 on a regular basis. All right, let's go and follow ourselves on this one. It's not that hard. Now, we have here, let's imagine for the moment, that all we have is this. We have Rhode Island, plaintiff, versus defendant, Mississippi. No problem. We got complete diversity, the line down the center of the page makes it very clear that we have diversity of citizenship. Not a problem at all. Now, same thing here, even though we have multiple plaintiffs, no problem. Because we have a corporation there with two states of citizenship, we'll look at it in a moment, but we don't have the same state on either side of the line. Of course, as soon as we go to this, now we do have a problem. And we have a problem even if you knock out either of these two states of citizenship, because the same state is on both sides of the line. All right? So that's not a problem. Now, of course, we'll look at it in a moment if you have a third party defendant. You don't have to worry about them, because when we get to supplemental jurisdiction, they're not part of the equation at this stage unless they come in as a plaintiff. If for some reason they're intervening as a plaintiff, or being joined as a plaintiff, then you've got to put them on line up. But if they're only coming in as a third party defendant, that is what used to be known as ancillary jurisdiction, now known as supplemental party or defendant jurisdiction. So let's save that until we get to the insulating subject of supplemental jurisdiction, but that's the easy part on that one. Now, let's figure out how you figure out what citizenship they are. These are just simple rules of algebra. Or if you like geometry better, they're also geometric. Let's start with individuals. You know the rule. The rule for individuals, of course, is that you look at their domicile at the time the actions commenced. At the time the actions commenced, not before, if they've moved, and not after if they move. You take a snapshot at the moment the actions commenced, whatever that means in the state you're in, if it's not. Okay, now, I should tell you something else. This rule of complete diversity is not constitutionally required. Congress can impose minimal diversity as it has an inter-pleater actions, for example. And ancillary jurisdiction really is sort of an exception of what used to be ancillary to this. So what does this mean at the time the actions commenced and what does it mean to have a domicile? Well, you know the domicile rule. If this is like a bad dream of law school, forgive me. We have to walk through it together. It means where they intend to remain permanently. And that's usually a fact question if you've got a close call. Take a look at Galva Foundry versus Haydn in the seventh circuit in your materials. That's an example where the court goes through the various factors, where they vote, where they live, et cetera. I'll give you my rule of thumb on what the appellate courts do. They try to uphold what the district court's done. That's my own impression, more often than not. I haven't done a scientific study, but they're not reversing district courts determinations of diversity very often. But let me show you how crazy it can be. In a case decided by my co-author, Judge Tashima, from the Central District of California in Haydn versus Havelach of two years ago, at the time the action was filed, plaintiff, let's say, wag staff of California suing defendant Jones of Texas, wag staff is moving to Texas, in this case, perhaps. But I haven't yet loaded anything and for that day, I'm in California. That's where I'm there that day. At the time the actions commenced, I live in California and that's where I intend to remain right then. Court held, even though I actually had a truck ready to move my stuff under this hypothetical, court held, no, there is complete diversity because you take a snapshot of the time the actions commenced. That's a little frivolous. Perhaps I think the correct decision, but you could argue that, no, where he didn't really intend to stay in California, therefore there was no intent to remain permanently. This issue comes up for people like students, for prisoners, and people who have sort of transient existences. But there has to be a single domicile, so if you've got someone who doesn't have any domicile, they aren't gonna satisfy having a citizenship whatsoever. Let's get to where there's more interesting action. Corporations, dual citizens, of course. You look at where they have their principal place of business and where they have all states in which they're incorporated. It could be one, it could be the same state, it could be two, it could be three, it could be four. What kind of tests do you apply for where they have their principal place of business? Well, it's one of two. One test is the seventh circuit, and at least the seventh circuit picks it up, is the nerve center test. Where do they have their corporate offices? Where do they have their corporate offices? In the ninth circuit, in the tectonics case, you don't look to where their corporate offices are, you look to where they have the bulk of their corporate activity, if any state has that majority. If no state has it, it's far flung, then even in the ninth circuit, you look to where their offices are. So that's how you decide what states go underneath the corporate name. Now, is it this easy? You know everything I said so far, so let's come to some you may not know. How about a defunct corporation? You gotta love this to concern yourself with defunct corporations. What is the principal place of business of a defunct corporation? As in, subject to this nature, there is a split of authority. Some decisions hold a defunct corporation has no principal place of business because it isn't doing any business at all anymore, so you only look to a state of incorporation. Other circuits, I think the majority rule hold, you look to the state in which it had its last place of business, and at least in those circumstances, that's where you'll add that state to it. How about one that's perhaps more common? That came up in my office on Friday. As soon as you tell people you're a civil procedure nerd, they start throwing their hypotheticals by it. How about a parent subsidiary situation? When will the parent or the sub take up the citizenship by attribution of the other? That's the question. I'm gonna give you the USA Today version of the answer. I think the answer by and large is unless they are alter egos of each other, you don't have any attribution whatsoever. They're entitled to their separate citizenship. Absent alter ego status. Now, the Ninth Circuit Publisher, the decision Dan Jack last year, essentially along those lines. The Fifth Circuit, I think it's your materials, also has something, 2305 has case law on this area. If not, it's in the update that's coming out soon, which we're happy to provide you. The essentially though is when you're talking about that, find out if they're separate. If they're separate, then give them the citizenship of their own. You don't have to look at the business activities of the, even a wholly owned subsidiary. Even a wholly owned subsidiary, and even if the wholly owned subsidiary is controlled by the parent. If it doesn't rise to the level of alter ego, I think the wholly owned subsidiary gets its own citizenship. For better or worse, that will more often result, I believe in closure of the door, but in any event, we'll see. Lastly, I'll throw it out to you, because afternoon, never talk in the afternoon, it's another rule I wanna take. It's what about a professional corporation? What is a professional corporation? I'm in one. Is it a partnership or a corporation? Question, what's the answer? Oh, look to state law. What, look to state law, that's a win-in-doubt, sight-witkin. Look to state law, that's a good idea, but not the right answer. I think the correct answer is that it is a corporation. You look, the question you ask yourself is this, is it a corporation? If it is a corporation, then it is to be treated as a corporation for diversity purposes. And when we get into some of these dicier kind of entities, that's the question you ask yourself. Is it a corporation? If it's a corporation, even a professional corporation, according to the Seventh Circuit in National Association of Realtors, which is in your materials, even there, you're gonna look to its principal place of business and to where it's incorporated. You don't look to where all the partners preside, I'm sorry to say. All right? Now, what about partnership? That's an Ed McMahon segue to partnerships. Partnerships, as you know, and I'm now gonna not go out on a very far limb. I think it's a short limb. Every artificial entity, other than corporations, are treated like partnerships. Every artificial entity, other than a true corporation, is treated like a partnership. Now, what does that mean? Again, if you love jurisdiction, when the Cardin decision, Cardin versus Arcoma came down a few years ago, this is one you really like. I mean, they decide diversity cases. Every decade, this was a diversity case. Partnership, let's suppose it's the Wagstaff-Kelly partnership, a good partnership. Wagstaff of California, suing Kelly, with Kelly partner, not suing, that'll come in a moment. Wagstaff and Kelly partnership from Virginia, Virginia and California, bringing a lawsuit against Caulfield of California. We will suspend judicial immunity for purposes hypothetical. We now have a question. Let's suppose, let's make it even better, although this would be the opposite in real life, the opposite in real life, or perhaps not the opposite. Wagstaff is a limited partner. Mary owns 99.99999% of the partnership. She's the general partner. I'm just a silent partner hanging in there. Let's put it on our line. If it's a corporation, of course, well, we got the principal place of business, et cetera, et cetera. But in this circumstance, what do we have? We have a partnership, and in a partnership, the citizenship of every partner goes on that sheet, even if it's 50. All of them go on the sheet. Every partner limited or otherwise. So in that hypothetical, no matter where we could claim our principal place of business is, we've got California and California. It's a partnership. It's not a corporation. See you later, Diversity and Jurisdiction. Carden versus Arcoma. That one is clearly the law. And that can throw out all sorts of diversity cases. Yes, Judge? If registered as a foreign corporation doing business, does that act of registration? Do anything with the jurisdictional? No, foreign corporation, you might have alien jurisdiction when we get to in a moment. That's our next level of fascination. However, the fact that it's a foreign corporation doesn't change it. You ask yourself whether it's, I think it's fair to say under Rule 17, the real part in interest rule, you look to the law of the state to determine whether it is or isn't a corporation. You look to the law of the state, and this is a little longer of a platform here, the law of the state of the forum, even if it's an entity from a different state. That's what I think. I think I asked my question in artfully. A California corporation registered, say, in Connecticut, does foreign corporation do now add Connecticut to this? No, not unless it's incorporated there. The Mirror Act of Registration does not, I do not believe it equals incorporation. Okay, so we ask ourselves, now what about other entities? What about other entities? Well, I said all artificial entities except corporations are treated as partnerships. Therefore, unincorporated association, every member counts, not just the main one. How about some of the ones these are mostly from Supreme Court cases. How about a joint stock operative? Not a corporation, I said everything, but corporations, every member of the joint stock operative. How about this hypothetical? The only other one I'll indicate may have been wrongly decided. You have an insurance company which ensures members of the military or a retired military, but it is called an inner insurance exchange. They pride themselves on everybody's an owner of the company and they get dibbidans, they call it, but they're all owners. Question, let's suppose we have that inner insurance exchange which is headquartered, say hypothetically, in Texas. But it's principal place of business being done there, of anywhere, but it has suing, being sued by a Californian in federal court on diversity. Tens of thousands of Californians. Question, is that properly in federal court? Answer, no. That's a great, see, we're getting along in this one. No, and the reason the answer is no is because it's not a corporation. The only way that case can be in federal court is if they argue that they are in fact a corporation. But if they argue they're like a corporation, that is the difference between lightning and the lightning bug. Being like a corporation is not enough. They must be a corporation. They are not a corporation, therefore the citizenship to the tens of thousands of members of that inner insurance exchange, they're all counted, there's a Californian on both sides. In fact there's a lot of Californians on one side, no diversity jurisdiction. How about this one? A partnership is sued by one of the partners. Now I said this is algebra. So now stay with me in algebra. Partner, Wagstaff, sues the Wagstaff-Kelly partnership. It's one of the defendants, say it's one of 10 defendants or one of three defendants. Do we have diversity? No, you are doing algebra with me. Wagstaff of California and Wagstaff is also a partner of the partnership he's suing, also therefore California. A partner can never sue a partnership under diversity in federal court. Some great public decisions and the materials on that topic. So that's our next entity we gotta deal with. All artificial entities, except for corporations, are treated as if everybody in that entity, big or small, important or unimportant, as long as they're in the entity, their citizenship counts. Knock this case out of the inception, don't find this in the middle of trial. You may at that point feel compelled to rule 21 some of the partners, don't do it in the middle of trial, do it at the beginning, save us from ourselves when we don't know these things, we should, you should. All right, now let's go to aliens.